Although Volusia County is experiencing a slowdown in new home construction, rapid residential growth during 2004 and 2005 has paved the way for an uptick in commercial development.
 

Consider: For the first three quarters of 2007, permits were issued for residential construction totaling $436 million, a 34.7 percent drop when compared with the $668 million in housing during the same period in 2006, says the most recent report issued by the Volusia Department of Economic Development.

Residential construction in Volusia County -- which peaked at $1.3 billion in 2005 -- dropped 9.6 percent between 2003 and 2006, from $857 million to $775 million.

However, on the commercial front, permits rose 27.6 percent with projects worth a total of $310 million during the first three quarters of 2007, up from $243 million for the same period in 2006. In addition, commercial construction permits rose 109.2 percent between 2003 and 2006, from $163 million to $341 million.

The reason? Volusia real estate experts say commercial development, especially the retail sector, is still catching up with Volusia County's previous homebuilding and population surge. In fact, they expect commercial development to continue its growth spurt for several years.

"Commercial retail development tends to follow rooftops, and there's still plenty of pent-up demand," says Phil Ehlinger, business manager of the Volusia Department of Economic Development.

Large new residential developments, such as Venetian Bay in New Smyrna Beach, have helped fuel retail demand. For example, that community is up to about 870 homes and has room for about 1,000 more, says developer Johnny Johnson. "We're still selling about two or three homes a week, but several years ago it was seven or eight a week. Periodic slowdowns are inevitable."

Because Venetian Bay has a town center, its commercial development is helping offset the residential slowdown in the community.

And now that Volusia has pushed past 500,000 in population, the county reached a tipping point, enabling it to lure more national and regional retailers such as Wal-Mart, Home Depot, Lowe's, Kohl's and Beall's to open multiple stores in the county, says Charles Lichtigman, chairman of Charles Wayne Properties, a Daytona Beach-based regional commercial real estate development firm.

For many years, Volusia's primary concentration of retailers set up along the U.S. Highway 92 corridor, Lichtigman points out. Now, with the recent growth of communities in the Port Orange, New Smyrna Beach, DeLand, Orange City and Ormond Beach areas, nearby retail hubs are expanding, he says.

For instance, Charles Wayne Properties is developing a retail center in Port Orange with another developer who's planning an adjacent retail center.

While retail development is booming in Volusia, other commercial sectors, including office and industrial, also are prospering, Ehlinger says. For example, Edgewater Powerboats is in the process of a major expansion.

"There's always money to be made in real estate -- it's just that the strong sectors change," says John Wickert, a commercial real estate broker with NAI Realvest in Daytona Beach.

Ehlinger and other real estate industry watchers believe by the time commercial development in Volusia begins its cyclical slowdown, residential development will be on the rise again. "At least that's what we hope."